How Much Car Insurance Do You Need?
It is a simple, yet complex question involving several significant issues and unless all of them are adequately sorted out, the dilemma remains dormant. However generally it can be said that the amount you pay as auto insurance premium should cover the cost of damages for life, medical expense, the cost of recovery, income loss and also property loss that may arise from an accident.
The Auto Insurance You Pay Depends On A Lot Of Factors
To start with, it may be relevant to find out the type of car that is to be insured. Does it constitute the good old commuter vehicle that is used on a regular basis, a collector vehicle exhibited occasionally or an exotic Rolls Royce that is ceremoniously used once in a blue moon? Also pertinent in Hawaiian Gardens, CA is another issue relating to the owner – is the party to be insured is a homeowner who is protected by umbrella policy and so deserves singular treatment.
For a normal vehicle used on a daily basis driven to workplace and back home, the Actual Cash Value i.e. ACV or Stated Value Policy should be fine when it comes to auto insurance. As for a collector's type or exotic car, one should opt for the Agreed Value Policy because if there is a total covered loss, the insurance company pays up the pre-determined or agreed value of the vehicle to the owner. The amount noted in the Agreed Value Policy can also be escalated with the passage of time (the price of such exalted cars actually appreciate with each passing year instead of depreciating) in consultation with the insurance company who have no qualms in coughing up the escalated price if it is stolen or has to be written off. It however, does not come into force in the case of ACV where the depreciation clause probably is taken into account.
As for the limits in the auto insurance coverage, one should go for higher limits since it provides the much needed respite from legal battles terminating at huge fines if one is found at fault in an accident. Nevertheless, this is where the umbrella policy comes to the aid where it should have 250K for every person, 500K for each accident or 500K all together as the limit on car insurance. This safety valve can protect a person when large sums of money are demanded through a court of law if one is sued for a fatal accident.
To Give A Clearer Picture On Vehicle Insurance, Here Is A Brief FAQ
Q. How high does the liability coverage in car insurance need to be?
A. None can predict precisely the amount one has to pay when there is an accident. However, higher the liability coverage in a Policy, better the chances of getting the full claim.
Q. How low or high should be the collision and also the comprehensive deductibles?
A. High deductibles lower the premium but escalate the amount one must pay on your own when a loss occurs.
Q. Should one carry comprehensive, including collision coverage?
A. One has to carry both if the car has been financed or leased but they may be dropped once the loan is paid off to save on your premium money.